DECC budget cuts could put energy and climate plans at risk

Budget cuts to the Department of Energy and Climate Change (DECC) could have a major impact on innovation research, energy efficiency and the UK’s ability to meet climate change goals, according to a report from thinktank Green Alliance. The paper comes ahead of next week’s budget.

The report – What new spending reductions could mean for DECC – argues that large historic liabilities from the nuclear and coal industries, a commitment to protect capital expenditure and the effect of applying spending reductions early on in parliament could reduce DECC’s budget by half in 2017-18 and it resource budget, which pays for programmes and staff, could fall 90% by 2018-19.

Green Alliance state these reductions would have a “major impact” across a number of areas and raise energy costs for consumers, making it harder for the government to negotiate good deals for back up capacity, low carbon generation and other energy services.

Matthew Spencer, director of Green Alliance, commented, “Less than a fifth of DECC’s budget is spent on its core mission of reducing energy costs and accelerating low carbon energy investments. Spending reductions will focus on these areas because the department is lumbered with historic liabilities from the nuclear and coal industries.

“The government’s ability to get a good deal for current consumers and future citizens will decline rapidly unless DECC gets a much better settlement than predicted in next week’s budget.”

Eight senior academics have written a letter to Rt Hon Oliver Letwin MP, minister for government policy, to raise their concerns about potential budget cuts and the impact on UK energy policy and climate action. They state that such reductions could inadvertently undermine the government’s ability to complete its important energy market reforms and deliver climate policy.

It continues, “Costs to consumers from energy policy are likely to be higher, and energy supply less secure if the government does not protect its in-house expertise to negotiate contracts with the energy industry, to complete energy market reform, and to develop new energy saving programmes for the most vulnerable customers.

“It is also vital that government protects its impressive track record in climate diplomacy and developing innovative carbon reduction policy, given that we have so much work still to do to reduce emissions and slow the rate of climate change.”

Photo: Janie.hernandez55 via Flickr

Further reading:

MPs question environment budget cuts amid UK floods

DECC offers £1m grant to promote energy saving

DECC plans to scrap solar farm subsidy will ‘undermine investment’

Budget 2015: Not the greenest government ever

Budget 2015: what we want versus what we’ll get